Release: World Bank tribunal gives green light to Canadian mining company

World Bank tribunal gives green light to Canadian mining company’s lawsuit against government of El Salvador

WASHINGTON, D.C. – A World Bank tribunal’s decision on Monday to moveforward with a Canadian gold mining company’s controversial lawsuitagainst the government of El Salvador highlights a central failure ofU.S. trade pacts to respect the national sovereignty of membercountries.

In 2009, Pacific Rim Mining filed the lawsuit under the rules of theU.S.-Central America Free Trade Agreement (CAFTA), demanding “hundredsof millions” of dollars from the Salvadoran government, which rejectedthe Vancouver, B.C.-based company application for exploitation permits.El Salvador’s Ministry of the Environment and Natural Resources arguesthat Pacific Rim never completed the necessary process to obtain anexploitation permit, and local communities have demonstrated widespreadopposition to the proposed El Dorado gold mine based on theenvironmental and public health risks of cyanide-leach mining.

“It is outrageous that the government of El Salvador is under attack for protecting the health and safety of its people,” said Alexis Stoumbelis, Executive Director of CISPES, the Committee in Solidarity with the People of El Salvador, which led protests in five U.S. cities and outside Pacific Rim headquarters in Vancouver, B.C. during the first round of ICSID hearings in late May. “This is the ugly and fundamentally anti-democratic reality of free trade.”

On August 3rd, the International Centre for the Settlement of Investment Disputes (ICSID) rejected the Salvadoran government’s preliminary objections to the suit, which could have led to the dismissal of Pacific Rim’s claim. Though this mechanism exists to avoid frivolous or coercive lawsuits, it is rarely, if ever, upheld in favor of a national government, suggesting a fundamental imbalance in favor of transnational corporations.

Free trade critics point to vague and far-reaching investor rights in CAFTA and other NAFTA-style trade agreements that allow foreign companies to contest national laws and government regulations through private arbitration. “The fact that an attack like this would even be possible highlights what is wrong with our current trade agreement model,” said Lori Wallach, director of Public Citizen’s Global Trade Watch

Because Canada is not party to CAFTA, Pacific Rim filed the suit through a U.S.-based subsidiary, which it acquired during its dispute with the Salvadoran government and after CAFTA entered into force in 2006. The government of El Salvador has filed new objections to the ICSID’s jurisdiction in this matter that center on Pacific Rim’s change of nationality.

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